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Rio Tinto: World Needs Another 800 Million Tons Iron Ore Over 8 Years

MELBOURNE -(Dow Jones)- Rio Tinto PLC (RIO), one of the world's largest iron ore producers, Thursday forecast the mining industry would need to produce at least another 100 million metric tons of the steelmaking commodity a year over the next eight years to satisfy demand growth. Many African countries will be well placed to meet this "staggering increase" in demand, David Joyce, head of expansion projects for Rio Tinto's iron ore arm, said in the text of a speech delivered at an Africa-focused mining conference in Perth. "As markets like China, India, Indonesia, Vietnam and countries in Africa and South America continue to industrialize and urbanize, we will see an increase in demand for better housing, cars, infrastructure and mobile phones. The level of metal intensity per capita will increase with this development," he said. Joyce said development of the Simandou iron ore project in Guinea is on track to ship its first ore by mid-2015, adding about US$1.5 billion has been invested to date toward what is set to be a 95 million ton-a-year mine, 650 kilometer railway and four-berth wharf. The company has previously said it expects investment in Simandou to reach more than US$10 billion, and that it would make every reasonable effort to achieve first production by the end of 2014. The project is being jointly developed with Aluminum Corp. of China (ACH), or Chinalco, which will earn a 44.7% stake in Simandou for investing US$1.35 billion. In Australia, Rio has plans to invest close to US$15 billion to grow its output in the western Pilbara region to 333 million tons a year by 2015, a 50% increase over five years. -By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094; robb.stewart@dowjones.com